National Anti-profiteering Authority upholds profiteering allegation against Johnson& Johnson

The National Anti-profiteering Authority (NAA) on Tuesday upheld allegation of profiteering against consumer major Johnson & Johnson and asked the company to deposit ₹230 crore in the Consumer Welfare Fund (CWF).

When contacted, the company did not comment on the ruling. J&J is family of companies engaged in businesses of consumer products, medical devices, vision care and pharma.

The matter is related with benefit of rate reduction to be passed on to the consumers. Rules say, anti-profiteering provisions get applied if the benefit of reduction on rate of tax on any supply of goods or services or the benefit of input tax credit is not passed on to the recipient by way of commensurate reduction in prices. An application to invoke anti-profiteering provisions can be made by an interested party or a Commissioner or any other person.

Based on the reference from Standing Committee in January this year, the Director General of Anti-Profiteering (DGAP) investigated the allegation that benefit of reduction in the GST rate on the products supplied by the company after the GST rate was reduced to 18 per cent from 28 per cent. In its investigation, DGAP concluded that the amount of net higher sales realisation due to increase in the base prices of the impacted products, despite the reduction in GST rate, or in the other words the profiteered amount came to ₹230.40 crore.

The DGAP also claimed that the profiteered amount has been arrived at by comparing the average of base prices of the impunged products sold during November 1, 2017 to January 14, 2017, with the actual invoice-wise base prices of the products sold during November 15, 2017 to December 31, 2018. The excess GST so collected from the recipients, was also included in the aforesaid profiteered amount by the DGAP on the excess price collected from the recipients also included the GST charged on the increased base price.

After detailed hearing, NAA reached on the conclusion that the company denied the benefit of the tax reduction to the consumers which is contravention the GST law. It upheld the DGAP’s report. The authority said that since the company has profiteered, so it is liable for imposition of penalty. Accordingly, a show-cause notice will be issued.